Undrilled portions of Tarn contracted out of unit

Kristen Nelson

Petroleum News Editor-in-Chief

The Tarn participating area of the Kuparuk River unit on Alaska’s North Slope has been contracted to exclude non-drilled areas on the north and south of the participating area.

The Alaska Department of Natural Resources, Division of Oil and Gas, said in a July 2 letter to Kuparuk River operator ConocoPhillips Alaska that in addition to the contractions, an area on the east will remain in the participating area if two wells are drilled in the area by July 1, 2005. Two smaller areas, on the southeast boundary of the participating area, will remain in the area if a well is drilled in each by July 1, 2006.

The Kuparuk River unit was expanded and the Tarn participating area was established on its western edge Sept. 24, 1998. The state required the expansion area to be included in a participating area and drilled within five years, or the expansion area would be automatically eliminated from the Kuparuk River unit.

The division said ConocoPhillips requested a revision of the Tarn participating area in May, and in June asked for four relatively small areas to remain in the Kuparuk River unit “to streamline permitting and ease administrative burdens on all parties involved.” ConocoPhillips told the state that these portions of leases contain road and pipeline routes and keeping them within the unit eases the “right-of-way administrative burden” on the state.

ConocoPhillips told the state in late May that it was electing not to drill in another Kuparuk River expansion area, unit tracts 151 and 151A. The 2002 eighth expansion of the Kuparuk River unit required a commitment to drill a well in tracts 151 and 151A by June 1, 2003, or unit owners would pay the state $91,548 for the bid deferral for the tracts. These tracts are on the western side of the unit, south of the Palm area.

ConocoPhillips told the state it was either committing to drill, or has already drilled, other wells required by the eighth Kuparuk River expansion, except in the expansion three area, on the southern border of the unit, where ConocoPhillips has until June 1, 2004, to drill a second well, or pay the state $24,488 for non-performance of the drilling commitment. ConocoPhillips told the state the Kuparuk River working interest owners intend to hold the expansion area’s three tracts at least through June 1, 2004, “and may elect to drill a well” in that expansion area to meet the second well commitment.